A Purchase on Account with an Invoice Price of $750

question 40

Multiple Choice

A purchase on account with an invoice price of $750 has been made. The entry to record the payment after the 2 percent discount period would include a(n)

• A) decrease to Accounts Payable for $750.
• B) decrease to Purchases Discounts for $15.
• C) increase to Accounts Payable for $735.
• D) decrease to Cash for $735.

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Definitions:

Proportional

Characterized by or corresponding in size, degree, or intensity according to a fixed ratio or relationship.

Price Elasticity

A measure indicating how much the quantity demanded of a good responds to a change in its price, often illustrating the sensitivity of demand to price changes.

Relatively Elastic

Characterizes a situation where the quantity demanded of a good or service changes significantly due to a small change in price.

Excise Tax

A tax directly levied on certain goods, services, and activities such as tobacco, alcohol, and gambling.